Lukoil says no to key Iraq oilfield

Moscow, December 24, 2012

Russia's second-largest crude producer Lukoil said on Monday it decided not to join the development of Iraq's West Qurna-1 oilfield, citing high risks.

Lukoil oversees the largest share of oil reserves in Iraq among foreign companies and is already involved in the West Qurna-2 project.

"We have analysed all the risks and decided that, as we have been implementing such a global project as West Qurna-2 without a partner, we would have taken great risks by entering another big project such as West Qurna-1," Andrei Kuzyayev, head of Lukoil Overseas, told Russian state TV channel Rossiya-24.

West Qurna-1 became available for Lukoil and other majors last month when ExxonMobil has informed the Iraqi government it wants to pull out of the $50 billion project in southern Iraq.

Baghdad expects Exxon to complete the sale of its shares in West Qurna-1 by the end of December and the US company has told Iraq it is already in talks with other oil majors.

The US firm has riled the Iraqi central government by signing deals with the autonomous Kurdistan regional government.

Lukoil has been trying to offset production declines at its brownfields in Russia's West Siberia which accounted for some 56 per cent of its total production last year by increasing its portfolio of foreign upstream assets.

Lukoil owns 75 per cent in West Qurna-2 and has been looking for a partner to replace Statoil which decided to leave the project earlier this year, but declined to name any candidates.-Reuters